PHOENIX (Thursday, April 26, 2012) -- Arizona Attorney General Tom Horne has reached a settlement with Underwater Property Solutions, LLC ("UPS"), a Scottsdale, Arizona based mortgage loan modification service company that the State accused, in a consumer fraud lawsuit, of participating in a deceptive scheme designed to collect advance fees from consumers looking for assistance in obtaining mortgage loan modifications. In nearly all cases, it is illegal for businesses to charge upfront fees for loan modifications.

The State alleged that, along with co-defendant The Mortgage Law Group, LLP ("TMLG"), that also does business under the name Macey, Aleman & Searns, a Chicago, Illinois law firm, UPS agreed to market mortgage modification services to consumers as legal services to be performed by TMLG attorneys, including local "partners" in the states where TMLG's clients resided. The State alleged that UPS did nearly all of the substantive work for consumers who paid "retainer fees" to TMLG. The State also alleged that UPS told consumers that TMLG could stop foreclosures, that consumers were guaranteed a modification if they hired TMLG, and that consumers would save hundreds of dollars a month with their modifications, when the representations were nothing more than speculation and often proved to be false.

The settlement, which is awaiting court approval, will permanently prohibit UPS from engaging in any consumer debt or loan modification activities in Arizona or on behalf of Arizona consumers and requires UPS to pay full restitution to consumers who filed a complaint with the Attorney General's Office, as well as attorney's fees. In entering into the settlement with the State, UPS did not admit that it violated the law nor did the court make findings that it did so. Litigation against TMLG continues.